Silver: Time To Get Excited?

| February 24, 2014 | 0 Comments

silverThings are finally looking up for silver bulls!

In case you’re unaware, silver has jumped $3 an ounce over the past few weeks.  The recent rise makes it the top performing metal in 2014 with an 11.9% year-to-date gain.

Take a look…


As you can see, it’s been a decidedly bullish ride since early February.  A recent dose of unexpectedly weak global economic data has investors rethinking their previously bearish views on silver.  After all, if global growth slows too much, Janet Yellen and the Federal Reserve may be forced to abandon their recently adopted stimulus tapering program.

So is it smooth sailing for silver bulls from here on out?

Not quite.  Silver is about to face a major technical test.  The commodity is rising to a very important technical area that will determine the metal’s performance for the next few months.

Let me show you what I mean…


As you can see in this long-term weekly chart, silver is rising to the same trend line that has hurt it so many times in the past (red line).  Each time the metal rallied to the downtrend line over the past few years, it was pushed aggressively lower by sellers (red circles). 

So it goes without saying that what happens at the line this time around will have a huge impact on the metal’s direction over the next few months.

If sellers take control, we could see the metal retest the yearly lows at $19…

On the other hand, if buyers can push silver beyond the red line in the chart above, then the metal may be on the cusp of a major rally. 

What’s my reasoning?

Fact is, silver is still a heavily shorted commodity.  While there has been some short covering over the past few weeks, bears are still a considerable force to be reckoned with. 

But if the metal can break above the red line in the chart above, we could see the bears really start running for the hills.   In other words, there could be an all out scramble to see who can exit their short positions first.

Bottom line…

Keep a close eye on silver this week.  Thanks to the recent rally, the metal is at a big technical turning point!

Until Next Time,

Justin Bennett

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Category: Silver

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.